Editor's Note

Starting from the rollout of New China's first automobile, generations of automotive professionals have worked tirelessly, marking 70 years of resilience in China's auto industry. Looking back, the transformation is astonishing: from scratch, China has led the world for 17 consecutive years in annual auto production and sales, 11 consecutive years in new energy vehicle (NEV) production and sales, and 3 consecutive years in auto exports as of last year. Seizing strategic opportunities in electrification, intelligence, and green development, China has accelerated its shift, leading in core technologies, the comprehensive rise of domestic brands, and entering a new phase of globalization. Standing at a new starting point, China embarks on a new journey to build a strong automotive nation.

To commemorate the 70th anniversary of New China's first automobile rollout, Auto Review presents this special “Cover Story” series, consisting of 13 articles. Today, we release the 10th installment. Stay tuned.

Over the past seven decades, China's auto supply chain has evolved from internal support within automotive enterprises to a key participant in the global industrial chain. Each leap forward has built upon the capabilities accumulated in the previous stage, collectively shaping today's Chinese auto industry.

The journey of China's auto supply chain over these 70 years is far more complex than a mere shift from 'parts factory to supplier.' Behind it lies an ongoing industrial reorganization that parallels the growth of China's auto industry: from the internal support systems of automakers to market-driven specialization, then to integration into the global auto industrial chain, and finally toward a new supply chain system driven by technologies such as electrification and intelligence.

These stages have progressed layer by layer. The manufacturing capabilities, industrial talent, and systemic experience accumulated in earlier stages have laid the foundation for subsequent leaps. It is through this evolution that a once-dependent parts system, serving as a supporting role for automakers, has gradually grown into a significant force capable of participating in—and even influencing—global automotive technology competition.

One Automaker, One Industrial City

The year was 1953 in Changchun, where the foundation stone was laid for China's First Automobile Works. At that time, China hardly had a modern auto supply chain system.

The nascent Chinese auto industry lacked mature industrial support capabilities. To achieve Vehicle manufacturing (vehicle manufacturing) from scratch, automakers had to incorporate numerous production processes into their own systems, covering the complete chain from engines and transmissions to axles, bodies, mold casting, and forging.

This model later became known as the 'mother factory + specialized subsidiary factories.' Within a single automaker, multiple specialized production units were often established, responsible for different links such as engines, transmissions, axles, bodies, molds, casting, etc. The entire enterprise functioned like a self-contained 'mini industrial city.'

Today, many well-known large parts companies can trace their development back to being specialized subsidiaries under an automaker, as components of this 'industrial city.' Their later separation from the automaker's system and entry into the market marked an important starting point for the specialization of China's auto supply chain.

The core logic of this stage was 'self-sufficiency.' Parts production was uniformly organized and allocated under national plans, forming an internal support system dependent on automakers rather than a modern, market-driven supply chain based on specialized division of labor.

Yet this model was not without value. The industrial system formed during the planned economy era cultivated China's first generation of industrial workers and engineers capable of large-scale machining, while also promoting the accumulation of foundational manufacturing capabilities in casting, forging, and stamping. These early foundations provided crucial support for the later professionalization and marketization of China's auto parts industry.

From 'Supporting Roles' to 'Specialized Division of Labor'

After 1978, market mechanisms were gradually introduced into the auto industry, and a series of joint ventures were established: Beijing Jeep, Shanghai Volkswagen, Shanghai General Motors... These joint ventures brought not only new models and technologies but also a new concept of industrial organization: parts were no longer just an Subsidiary links (ancillary link) within automakers but began to emerge as a professional field capable of independent market competition.

This change was first reflected in the growth of a group of domestic parts companies. For example, Wanxiang entered the market through universal joints and gradually integrated into domestic and international auto supply systems; Fuyao Glass took the localization of automotive glass as a breakthrough, continuously improving its technological capabilities to become a representative enterprise in China's automotive glass industry. The development trajectories of these two companies reflect the broader shift in China's auto supply chain from being an appendage of automakers to Professional development (specialized development).

With joint-venture automakers introducing global procurement systems, the original 'comprehensive' support model within automakers began to loosen. A number of parts factories affiliated with automakers gradually transitioned to independent operations and corporate restructuring, while a large number of socialized parts companies entered the market. Specialized suppliers emerged in areas such as seats, interiors, lighting, braking, steering, suspension, air conditioning, and wiring harnesses.

The most significant change during this stage was the first shift in China's auto manufacturing system from vertically integrated 'comprehensiveness' to market-based specialized division of labor. Parts companies were no longer just production units within the automaker's system but began to emerge as industrial entities with independent technological capabilities, customer resources, and development paths.

The manufacturing experience, quality systems, and market awareness accumulated during this period also became important foundations for Chinese parts companies to integrate into the global supply chain and compete internationally later on.

From Local Suppliers to the Global Tier System

China's accession to the WTO in 2001 marked another critical juncture in the development of its auto supply chain. Over the following decade, the global auto industrial chain accelerated its extension into China, with international Tier 1 suppliers such as Bosch, Continental, and Denso entering the Chinese market.

These multinational parts companies brought not only supporting products for joint-venture automakers in China but, more importantly, promoted the exposure of China's supply chain to the mature development processes, quality systems, and management practices of the global auto industry through localization, technical cooperation, and talent cultivation, gradually reshaping the capability foundations of local enterprises.

A typical case is United Automotive Electronic Systems (UAES), founded in 1995 as a joint venture between Bosch and SAIC. Initially, its main task was to localize the engine management system for the domestic Santana. During this process, a group of Chinese engineers were systematically exposed to the development, calibration, and validation processes of engine electronic control units (ECUs). As the industry developed, these technicians, who grew up within the joint-venture system, later joined or founded local automotive electronics companies, becoming an important technological accumulation for the development of China's automotive electronics industry.

At the same time, Chinese suppliers began to systematically adopt international quality systems such as APQP, PPAP, and IATF16949. For many companies, this meant not just certification but a comprehensive upgrade of manufacturing processes, quality management, and supply chain systems, laying the foundation for subsequent global competition.

During this stage, a group of Chinese parts companies also accelerated their entry into the global market through capital operations and overseas mergers and acquisitions. For example, Joyson Electronics and Wanxiang Group began acquiring technological and market resources overseas, significantly accelerating the internationalization of Chinese parts companies. Among them, Joyson Electronics gradually grew into a global supplier covering automotive electronics and safety systems by acquiring Preh and integrating KSS assets.

However, objectively speaking, while China's supply chain had deeply integrated into the global auto industrial system during this period, it still primarily played manufacturing and supporting roles. Most companies remained concentrated in cost, scale, and manufacturing efficiency advantages within the global value chain. Although Chinese suppliers gradually mastered the ability to manufacture products to global standards, they were still some distance away from defining technological directions and leading industrial rules.

New Energy Reshapes the Supply Chain

If the main theme of the first three stages can be seen as learning, catching up, and accumulating capabilities within the global auto industrial system, then starting around 2015, with the rapid development of the new energy vehicle (NEV) industry, China's auto supply chain entered a new phase.

This transformation did not happen suddenly but was a re-release of decades of industrial accumulation on new technological tracks. The manufacturing capabilities, talent reserves, supply chain systems, and market experience developed in the traditional auto sector found new applications in the NEV era, completing capability migration along several clear paths.

The first path was the cross-border migration of industrial capabilities. Contemporary Global Battery Enterprises (CATL), a key player in the global power battery sector today, can trace its technological accumulation back to Advanced Lithium Electrochemistry (ATL), founded in Dongguan in 1999. At that time, ATL primarily supplied lithium-ion battery products for the consumer electronics market. In 2011, ATL's automotive power battery business team independently established CATL, entering the NEV power battery field. The material systems, manufacturing processes, and large-scale production experience accumulated during the consumer electronics era provided an important foundation for its entry into the power battery sector.

Similar industrial capability migrations also occurred in electric drive and electronic control fields. Some companies active in core NEV parts today have technical teams and management talent with backgrounds in traditional automotive electronics, having been trained in global auto industrial systems at companies like Bosch, Continental, and UAES, and bringing relevant experience into new industrial chain links.

The second path was the industrial iteration capability brought by the scale of the NEV market. In 2009, China launched the 'Ten Cities, Thousand Vehicles' NEV demonstration program, followed by a series of policies such as purchase subsidies, tax incentives, and infrastructure construction that drove rapid growth in the NEV market. China gradually formed the world's largest NEV market. This vast application scenario provided Chinese suppliers with ample space for product validation and iteration. Scale brought not just cost advantages but also engineering validation efficiency, industrial collaboration speed, and data accumulation capabilities. These factors collectively propelled Chinese companies to form strong competitiveness in emerging fields such as power batteries and electric drive systems.

The third path was the undertake (inheritance) of traditional manufacturing system capabilities by the new energy industry. Core new energy components such as power batteries and electric drive systems place higher demands on production consistency, automation levels, and quality control capabilities. Over the past decades, China's supply chain has continuously learned and improved quality management systems, lean manufacturing systems, and large-scale production capabilities around the auto industry, providing a manufacturing foundation for the large-scale development of the new energy industry. It was these long-term accumulations that enabled China's supply chain to meet large-scale industrialization demands during the rapid expansion of NEVs.

Under the combined effects of these factors, new industrial links such as power batteries, electric drive and control systems, domain controllers, intelligent driving chips, software platforms, and intelligent cockpits gradually formed large-scale industrial clusters in China.

At the same time, companies like CATL, Horizon Robotics, Black Sesame Technologies, and Inovance Technology began to occupy more central positions in the global auto industrial chain, gradually providing technological solutions and product services to international automakers.

This change signifies that China's auto supply chain is shifting from past 'technology import and manufacturing undertake (inheritance)' to a more bidirectional industrial interaction. This transformation is not a sudden result of the new energy era but a concentrated expression of seven decades of industrial accumulation in the new technological cycle.

From Manufacturing Advantages to Technological Breakthroughs

However, it would still be inaccurate to assume that China's auto supply chain has completed a leap from 'supporting roles' to 'defining roles' in all areas.

In fact, a clear capability gradient still exists between traditional mechanical parts and emerging electronic parts, which is key to understanding China's supply chain's current position.

In fields such as power batteries, electric drive systems, intelligent cockpits, and some intelligent sensing areas, China's supply chain already possesses strong global competitiveness, with some companies even beginning to shape industry technological directions. However, gaps remain in more foundational automotive electronics areas.

Take automotive-grade chips as an example: key devices such as microcontrollers (MCUs), insulated-gate bipolar transistors (IGBTs), and the electronic design automation (EDA) tools supporting chip design have long been dominated by international companies like NXP, Infineon, and Renesas. Chinese domestic suppliers are still in the stage of continuous breakthroughs and industrialization catch-up.

The global 'chip shortage' from 2020 to 2021 made the auto industry realize on a large scale for the first time that in the new NEV track (track), supply chain competition depends not only on application-layer capabilities such as complete vehicles, batteries, and electric drives but also on foundational electronic components, which determine industrial security and technological autonomy space.

In recent years, companies like Horizon Robotics and Black Sesame Technologies have made progress in intelligent driving chips, but in more foundational, larger-scale automotive-grade control chips and power semiconductors, the localization process still requires further accumulation. This imbalance in upstream and downstream capability development constitutes one of the key features of China's current NEV supply chain.

Moreover, this industrial capability gap now intersects with geopolitical variables. Just as Chinese suppliers are gradually capable of exporting technological solutions to global automakers, the political environment of the global auto industrial chain is also changing. The closer technological capabilities are to core industrial links, the more complex the market access and regulatory challenges become.

Take the U.S. adjustments to connected vehicle regulations as an example: in recent years, the U.S. has continuously strengthened supervision and review of Chinese intelligent connected vehicle technologies, covering areas such as vehicle connectivity systems and autonomous driving-related hardware and software. This means that even if Chinese suppliers possess technological competitiveness, they may still face market access restrictions beyond technology. Similar situations are emerging in areas such as power battery technology licensing, overseas investment Layout (deployment), and intelligent connected technology cooperation. For China's auto supply chain, the next stage of competition will no longer be just a one-dimensional technological competition but a comprehensive competition involving technological capabilities, industrial Layout , and global regulatory adaptability.

In other words, the future challenge for China's supply chain is not just 'whether it can define technology' but also 'whether it can realize technological value in the global market environment.'

Looking back over seven decades, China's auto supply chain has completed an evolution from internal support systems within automakers to specialized suppliers, then to global industrial chain participants and important contributors to technological innovation. The new energy and intelligence era is not the starting point of this process but a concentrated release of decades of industrial accumulation.

Yet this evolutionary path is not over. From foundational core technology breakthroughs to adaptation to global market rules, China's auto supply chain will still face new competitive challenges in the future.

Note: This article was first published in the August 2026 issue of Auto Review magazine's 'Cover Story' column. Stay tuned.

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